Are Christmas Parties Tax-Deductible ?

It's coming up to that time again when companies are considering a good night out with colleagues. So, are Christmas parties tax-deductible ? Here are a few guidelines:

For the cost to be tax-deductible it must be:

·          

•           Open to all employees
•           An annual event
•           Cost less than £150 per head

If your event meets the above criteria then there is no benefit in kind on the Christmas Party/meal and it is allowable for tax.

However beware...

• The £150.00 includes VAT
• If the cost is £151.00 then all of it is taxed as a benefit in kind
• This is not a licence to put a flat rate of £150.00 through your accounts
• You can have more than one event but the £150.00 is reduced proportionately
• Like all business costs you must have a receipt
• The event must be for all employees and not just directors - except where the director is the only employee

The £150.00 limit is for each employee so no family or friends allowed. However if you are a Director and therefore an employee of your own company then you can have a Christmas meal courtesy of the company.